Term Life Insurance

Term Life Insurance enables you to match the length of the policy term to the length of the need. For example, if you have young children and want to help ensure that there will be funds to pay for their college education, you might buy 20-year term life insurance. Or if you want insurance to repay a debt that in a specified time period, buy a term policy for that period.

In general, term life insurance pays only if you die during the term of the policy, so the rate is lower than for permanent forms of life insurance. If you are still alive at the end of the term, coverage stops unless the policy is renewed. Unlike permanent insurance, you will not build equity in the form of cash value. If you think your financial needs may change, you may also want to look into "convertible" term policies. These allow you to convert to permanent insurance without a medical examination in exchange for potentially higher premiums.

Keep in mind that premiums are typically lowest when you are young and increase upon renewal as you age. Some term insurance policies can be renewed when the policy ends, but the premium will generally increase. Some policies require a medical examination at renewal to qualify for the lowest rates.

Permanent (or Whole) Life Insurance

You may need life insurance for as long as you live. A Whole Life Insurance policy pays a death benefit whether you die tomorrow or 100 years from now.¹

You may want to accumulate tax deferred cash value that could be a source of borrowed funds for a variety of purposes. The cash value element can be used to pay premiums to keep the life insurance in force if you cannot pay them otherwise, or it can be used for any other purpose you choose. You can borrow these funds even if your credit is not good. The death benefit is collateral for the loan, and if you die before it is repaid, the insurance company collects what is due before determining what goes to your beneficiary.

Keep in mind that premiums for Whole Life Insurance policies are generally higher than for term life insurance. However, the premium in a permanent policy remains the same no matter how old you are, while term premiums can go up substantially every time you renew.

Permanent Life Insurance Advantages

Lifetime protection

Tax deferred cash value¹

Access to your cash value to use however you wish

"Locked in" premiums

Income tax free death benefits¹

1. Assuming policy does not lapse due to insufficient premiums paid. Death benefit is subject to a deduction of unpaid premiums during grace period and any outstanding loan balances past the grace period.

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